NEW DELHI, Aug 1 (Reuters) – India’s parliament reopened on
Monday but opposition politicians forced a shutdown within
minutes, a sign that little progress is likely to be made in
passing reforms to accelerate growth in Asia’s third-largest
economy.

The renewed political bickering came as a top economic
advisory panel warned of slowing growth, lingering high
inflation and significant challenges to meeting fiscal targets.

During the five-week-long session, the government hopes to
introduce bills including those to streamline multiple taxes
into a goods and services tax (GST) and to boost payouts to poor
villagers for industrial projects developed on farmland.

Almost at the start of the session, members from the main
opposition Bharatiya Janata Party (BJP) left their seats and ran
towards the upper house chairman, shouting slogans and forcing
the house to be adjourned until Tuesday.

The BJP has demanded a vote to challenge the ruling
coalition government of Prime Minister Manmohan Singh for its
perceived mishandling of a spate of corruption scandals and high
inflation, with the sparring likely to further disrupt
proceedings till a compromise is reached.

“No answers have been given by him (Singh), no answers can
be given by him, so he has sought to sidetrack the entire issue
by attacking the opposition,” Arun Jaitley, the BJP’s leader in
the upper house of parliament, told a news conference.

The ruling Congress has a slim majority and it would not
want to risk a vote. The BJP has also in past sessions demanded
such voting, but come around to agreeing to a simple debate.

Should the reform proceedings be further delayed, the risks
to India’s economic growth prospects could sharpen, with the
prime minister’s economic advisers warning of slowing growth,
high inflation and challenging fiscal targets.

External factors, such as global economic outlook, and
reforms “are the two factors that will be important for India’s
growth outlook beyond the next two to three quarters of
slowdown,” said Morgan Stanley’s Chetan Ahya in a research note.

“While external factors are unpredictable, the government
needs to ensure that it initiates the policy reforms needed to
lift private investment,” said Ahya, cutting his growth forecast
for India to 7.2 percent in 2011/12 from a previous 7.7 percent.

The wish list of new laws includes allowing foreign
investment in supermarkets, freeing fuel prices, slashing
subsidies and reforming loss making state-run utilities.

Despite obvious economic benefits, most political parties in
India fear reforms may alienate a core voter base amongst
farmers and the rural poor.

Protests and land squabbles have held up major projects
including a proposed $12 billion steel mill by South Korea’s
POSCO and plans for tens of thousands of apartments
outside New Delhi.

The land bill, along with other proposals to share mining
royalties with local communities and to expand a scheme to give
cheap food grains to the poor, is pivotal to Congress’ chances
of cementing support among its rural voter base ahead of
national polls in 2014.

India is also watching the progress of a tough anti-graft
bill after a string of scandals.

NEW DELHI (Reuters) – The parliament reopened on Monday but opposition politicians forced a shutdown within minutes, a sign that little progress is likely to be made in passing reforms to accelerate growth in Asia’s third-largest economy.

The renewed political bickering came as a top economic advisory panel warned of slowing growth, cutting the annual growth forecast to 8.2 percent from 9 percent.

During the five-week-long session, the government hopes to introduce bills including those to streamline multiple taxes into a goods and services tax (GST) and to boost payouts to poor villagers from industrial projects developed on rural land.

Almost at the start of the session, members from the main opposition Bharatiya Janata Party (BJP) left their seats and ran towards the speaker’s chair, shouting slogans.

They vowed to maintain pressure on the coalition government of Prime Minister Manmohan Singh and his Congress party, which is mired in various corruption scandals, and forced an adjournment until Tuesday.

“It is our sincere desire that this session runs smoothly and parliament should discuss all issues of national importance. The government is quite prepared for any subject which the opposition would like to be taken up,” Singh said at the start.

Should the reform proceedings be further delayed, the risks to India’s economic growth prospects could sharpen, with India’s Economic Advisory Council warning of slowing growth and lingering high inflation.

External factors and reforms “are the two factors that will be important for India’s growth outlook beyond the next two to three quarters of slowdown,” said Morgan Stanley’s Chetan Ahya in a research note.

“While external factors are unpredictable, the government needs to ensure that it initiates the policy reforms needed to lift private investment,” said Ahya, cutting his growth forecast for India to 7.2 percent in 2011/12 from a previous 7.7 percent.

The wish list of new laws includes allowing foreign investment in supermarkets, freeing fuel prices, slashing subsidies and reforming loss making state-run utilities.

Despite obvious economic benefits, most political parties in India fear reforms may alienate a core voter base amongst farmers and the rural poor.

Protests and land squabbles have held up major projects including a proposed $12 billion steel mill by South Korea’s POSCO and plans for tens of thousands of apartments outside New Delhi.

The land bill, along with other proposals to share mining royalties with local communities and to expand a scheme to give cheap food grains to the poor, is pivotal to Congress’ chances of cementing support among its rural voter base ahead of national polls in 2014.

India is also watching the progress of a tough anti-graft bill after a string of scandals including a multi-billion dollar telecoms scam.

(Additional reporting by Nigam Prusty; Editing by James Pomfret and Daniel Magnowski)

NEW DELHI (Reuters) – India’s coalition government has shown some signs of shaking off the paralysis it has suffered for months, but political wrangling will limit its thrust for reforms during the parliament session that begins on Aug 1.

The cost of insuring against default on 5-year sovereign debt has barely changed this year.

Following is a summary of key political risks in India:

PARLIAMENT AND REFORMS

The main opposition Bharatiya Janata Party (BJP) has vowed to continue taking on the government on issues of corruption and high prices, which could lead to frequent suspensions pf parliament, seriously disrupting lawmaking.

Few expect the government’s proposals to introduce a nationwide Goods and Services Tax (GST), and to amend land and mining laws to fast-track industrial projects, will be approved by parliament in the current five-week sitting.

While there is no major immediate threat to India’s pace of economic growth, which is expected to be around 8 percent in the year to March 2012, the wait for structural reforms is preventing more rapid expansion.

What to watch:

— Parliamentary sessions.

— Opposition statements and actions on reform bills, especially GST, which needs bipartisan support to be passed.

LAND ACQUISITION DISPUTES

Protests by farmers against land acquisition are re-emerging as a factor that could disrupt plans to industrialise and urbanise India rapidly.

A court has overturned the acquisition of several hundred hectares of land from farmers outside New Delhi, hitting plans to build tens of thousands of apartments for India’s rapidly growing middle classes.

Protests continue against land acquisition for South Korean firm POSCO’s proposed $12 billion steel mill, while land given to Tata Motors for a car plant has been taken away to be returned to farmers.

The government has promised a new law that will take the edge off protests by giving farmers market prices or better for their land, but there is no guarantee it will be passed by parliament during its August sitting.

What to watch:

— Whether the land acquisition bill is passed by parliament, and its final form.

— Further agitations against the POSCO plant and the government’s response.

— Court decisions. A court will decide on Aug. 17 whether to strike down another batch of land purchases for apartment-apartments, and has given until then for real estate firms, the government and farmers to reach a settlement.

CORRUPTION, PROTEST, AND PARALYSIS

A raft of high-profile corruption scandals in Singh’s second term have sharpened public anger against his government. As he struggles to deal with accusations, the government’s drive for reforms has taken a backseat.

Anna Hazare, a popular Gandhian social activist, has vowed to embark on a hunger strike from Aug. 16 to protest against corruption, which could be a lightning rod for fresh anti-government protests.

Hazare’s fast in April had been widely popular amongst a public fed up with graft and had forced the government to draft a new anti-corruption bill. But Hazare slammed the proposed law as being toothless and said he would push for a tougher law.

The risk is that as the government scrambles to deal with protests, its attention could further be diverted from nurturing the economy and stamping down inflation.

What to watch:

— Hazare’s planed August fast.

— The passage of the anti-corruption bill.

RISING INFLATION, SLOWING GROWTH

India is still unable to get a grip on high prices and the eleven rate hikes since March 2010 have only dragged on growth. Spending remains high, while tax revenue growth projection are clouded by weaker economic growth.

A long period of high prices will raise discontent and with it the probability that the government will take costly measures to combat them, as well as maintain its controls on fuel prices.

The central bank, one of the world’s most hawkish, is willing to sacrifice some short-term growth to cool prices, and the government is resigned to further rate hikes.

Wholesale price inflation, the main gauge of prices in India, stood at 9.55 percent in June, above the central bank’s comfort level of around 5 percent, and may hit double digits after fuel price hikes in end-June.

Many investors have fled the Mumbai stock market. With losses of 10.7 percent, it is one of the world’s worst performing major markets so far this year.

NEW DELHI (Reuters) – Parliament is poised to tackle thorny, though pivotal economic reforms when it reopens next week including bills to trim the tax burden on firms and fast track industrial projects, but political wrangling could strangle hopes for swift progress.

Amongst the proposed bills are those to streamline multiple taxes now hobbling businesses nationwide through a goods and services tax (GST) and to bolster payouts to poor villagers from industrial projects developed on rural land.

Analysts say it’s a crunch moment for India to improve its business climate and realise its vast, though stilted potential.

Hopes, though, for an immediate breakthrough are low.

“It doesn’t appear there’s any likelihood of parliament being quiet and intelligent discussion taking place. It’s more likely to be a bazaar scene,” said D.H. Pai Panandikar, head of New Delhi-based think tank RPG Foundation.

As is often the case in India, domestic political tussles may trump development priorities with the main opposition Bharatiya Janata Party (BJP) likely to disrupt proceedings and instead challenge the Congress-led government over a slew of corruption scandals and high inflation.

“(The bills) may become very controversial. I don’t think it’ll be easy to pass them,” Panandikar told Reuters.

The Indian economy, which roared to 8.5 percent growth in 2010/11, is showing signs of a slowdown and analysts say Prime Minister Manmohan Singh’s government needs to usher in a second-generation of reforms to build on growth unleashed by liberalisation of the economy two decades ago.

Despite obvious economic benefits, there remains a lack of political consensus within and outside the ruling coalition, with populist parties worried reforms may alienate its core voter base amongst farmers and the rural poor.

Protests and land squabbles have held up major projects from a $12 billion steel mill by South Korea’s POSCO to plans for tens of thousands of apartments outside New Delhi.

“When we take a bill to the parliament we hope it will be passed but we cannot put a deadline,” said Law Minister Salman Khursheed. “We all hope that the bill will be passed as soon as possible, but we cannot anticipate (when).”

The land bill, along with other proposals to share mining royalties with local communities and to expand a scheme to give cheap foodgrains to the poor, is pivotal to Congress’ chances of cementing its rural voter base ahead of national polls in 2014.

Despite the food bill posing a huge fiscal drain, possibly doubling food subsidies to more than $22 billion, and the mining bill on profit sharing likely to deter investors, they’re being championed by powerful Congress chief Sonia Gandhi and her son, Rahul, seen as a prime minister in waiting.

BOLDER STEPS NEEDED

There are signs the Singh government may be shaking off its policy paralysis including a recent fuel price increase, and moves to allow greater foreign investment in supermarkets in India’s potentially lucrative retail sector.

Investors, however, want far bolder steps.

“There will come a point when they will have to address those issues. Eventually there will be constraints on growth, and they’re probably holding back growth as of now,” said Andrew Kenningham, an India economist at London’s Capital Economics.

India is also watching the fate of the tough anti-graft Lokpal bill which was promised to placate popular social activist Anna Hazare whose April hunger strike succeeded in stirring public support for an independent ombudsman to crack down harder on entrenched public corruption after a string of scandals including a multi-billion dollar telecoms scam.

“We will expose the misdeeds of the government with new vigour inside and outside the parliament,” said BJP leader Ravi Shankar Prasad said.

But the BJP, which has blocked past parliamentary sessions over issues from a nuclear deal with the United States to corruption, is itself reeling from a mining scandal in Karnataka that has ensnared several important officials.

NEW DELHI (Reuters) – Indian and Pakistani foreign ministers hailed a new era in ties between the nuclear-armed rivals on Wednesday and agreed to fight militancy and boost trade and travel, a step forward in reducing tension in the world’s most dangerous region.

The comments from Indian Foreign Minister S.M. Krishna and his Pakistani counterpart, Hina Rabbani Khar, were unexpectedly positive and may be a small step toward improving regional stability, made more urgent with a U.S. troop drawdown in Afghanistan looming.

“This is indeed a new era of bilateral cooperation between the two countries,” Khar, Pakistan’s first female and youngest-ever foreign minister, told the media after two and a half hours of talks, standing next to Krishna.

“(It) is our desire, and I believe after having spoken to you, Mr Foreign Minister, that it is the desire of both the governments, to make it an uninterrupted and an uninterruptable process.”

Expectations of a breakthrough in peace talks have been low, but the fact the South Asian rivals are talking was a sign that neither side wants to slide back toward conflict.

The countries have fought three full-scale wars since winning independence in 1947, two of them over Kashmir, the disputed Himalayan region both claim in full but rule in part.

India and Pakistan in February resumed a formal peace process broken off after the 2008 attack on India’s financial capital of Mumbai by Pakistan-based militants, which killed 166 people.

“We have some distance to travel, but with an open mind and consistent approach, which has been demonstrated in this round of dialogue, I am sure we can reach our desired destination of having a friendly and cooperative relation between our two countries,” Krishna said.

FIGHTING “TERRORISM”

Importantly, they agreed to work more closely to fight militancy, which has plagued both countries, and to bring to justice perpetrators of militant attacks.

“We have agreed that terrorism poses a continued threat to peace and security and reiterate the firm and undiluted commitment of our two countries to fight and eliminate this scourge in all forms,” Krishna said.

“We have also agreed the need to strengthen cooperation in counter-terrorism to bring those responsible for terror crimes to justice.”

The United States has also stepped up efforts to bridge the divide between the neighbors. U. S. Secretary of State Hillary Clinton visited New Delhi last week and urged them to work on ties as well as stabilizing the volatile region.

As in previous peace efforts, progress has been slow and vulnerable to any attempts by Pakistan-based militants, fighting Indian security forces in its part of Kashmir, to try to trigger a war by launching another Mumbai-style attack.

But both sides kept their cool in the aftermath of a triple bomb attack in Mumbai this month that killed 24 people and injured more than 130. Police have yet to identify the suspects but security analysts suspect the home-grown Indian Mujahideen.

Krishna said the two countries had agreed to implement a series of confidence-building measures, such as relaxing some of the trade and travel restrictions across a ceasefire line dividing Kashmir.

Peace across the heavily militarized frontier between India and Pakistan is crucial for the United States to draw-down troops and stabilize Afghanistan without sparking off a proxy war between New Delhi and Islamabad in that country.

The two countries also agreed to continue talking on Kashmir, an issue that Pakistan is keen to move forward on.

“We will continue discussions (on Kashmir) with a view to find a peaceful solution by narrowing divergences and building convergences,” Krishna said.

NEW DELHI (Reuters) – A judicial report has indicted top ministers with illegal mining in BJP-ruled Karnataka, an explosive charge that will hurt the party’s anti-graft campaign against Prime Minister Manmohan Singh and his government.

Karnataka, the country’s second largest iron ore producing state, has long struggled with illegal mining and become a showcase of a failure by institutions to crack down on graft and where politics and business are closely intertwined.

Justice Santosh Hegde, an independent ombudsman tasked with investigating charges of corruption in the southern state run by the Bharatiya Janata Party (BJP), confirmed on national television the contents of the report leaked to local media.

The report is an embarrassment for the BJP, which has aggressively taken on the Congress party-led federal coalition government over a series of scandals.

The BJP may be forced to sack the top officials implicated in the report to avoid a collapse of the state government.

Three ministers in Karnataka are accused of charging miners up to 45 percent of their produce before allowing it to be transported to ports, costing the state coffers more than 18 billion rupees ($400 million) in lost revenue, Hegde said.

The state’s Chief Minister B.S. Yediyurappa was also named in the report but the specific allegations against him were not revealed.

“It’s a huge racket. As a matter of fact, the CM (chief minister) is responsible for what’s happening,” Hegde was quoted by the Times of India and Indian Express newspapers as saying.

Yediyurappa is on holiday abroad and his spokesman, K.P. Jagadish, declined to comment on the report saying it had not been presented to the state government yet.

The chief minister has in the past denied any wrongdoing.

“Let the report come out. We will take adequate and appropriate action once we have studied the report,” BJP spokeswoman Nirmala Sitharaman said.

The ongoing tussle in Karnataka resulted in the banning of iron ore exports from the state for a period. The state accounts for about a quarter of the country’s iron ore exports.

Yediyurappa is one of the few leaders in the party with a mass following.

“With the monsoon session of parliament days away, the BJP can hardly expect to put the UPA (federal government) on the mat on the issues of corruption and governance unless it cleans house in Karnataka,” said a Times of India editorial on Friday.

Corruption and red-tape have long hindered India, Asia’s third-largest economy, from maximising its growth potential.

Public anger has risen sharply, with people blaming politicians of all hues for maintaining a situation where bribes have to be paid for everything from a school admission to getting a death-certificate.

Topping the scandals is a charge a telecoms minister rigged the 2007/08 issuance of lucrative telecoms licences, causing a loss of $39 billion to the state coffers. The minister, since fired, is in prison along with several executives pending trial.

Perceptions of government inaction have built up massive support for the anti-graft campaign of veteran social activist Anna Hazare, who went on a hunger strike in April to demand the creation of an independent ombudsman to investigate charges of corruption against senior officials, including the prime minister.

NEW DELHI, July 22 (Reuters) – A judicial report has
indicted top ministers with illegal mining in a key state ruled
by India’s main opposition, an explosive charge that will hurt
the party’s anti-graft campaign against Prime Minister Manmohan
Singh and his government.

Karnataka, the country’s second largest iron ore producing
state, has long struggled with illegal mining and become a
showcase of a failure by institutions to crack down on graft and
where politics and business are closely intertwined.

Justice Santosh Hegde, an independent ombudsman tasked with
investigating charges of corruption in the southern state run by
the Bharatiya Janata Party (BJP), confirmed on national
television the contents of the report leaked to local media.

The report is an embarrassment for the BJP, which has
aggressively taken on the Congress party-led federal coalition
government over a series of scandals.

The BJP may be forced to sack the top officials implicated
in the report to avoid a collapse of the state government.

Three ministers in Karnataka are accused of charging miners
up to 45 percent of their produce before allowing it to be
transported to ports, costing the state coffers more than 18
billion rupees ($400 million) in lost revenue, Hegde said.

The state’s Chief Minister B.S. Yediyurappa was also named
in the report but the specific allegations against him were not
revealed.

“It’s a huge racket. As a matter of fact, the CM (chief
minister) is responsible for what’s happening,” Hegde was quoted
by the Times of India and Indian Express newspapers as saying.

Yediyurappa is on holiday abroad and his spokesman, K.P.
Jagadish, declined to comment on the report saying it had not
been presented to the state government yet.

The chief minister has in the past denied any wrongdoing.

“Let the report come out. We will take adequate and
appropriate action once we have studied the report,” BJP
spokeswoman Nirmala Sitharaman said.

The ongoing tussle in Karnataka resulted in the banning of
iron ore exports from the state for a period. The state
accounts for about a quarter of the country’s iron ore exports.

Yediyurappa is one of the few leaders in the party with a
mass following.

“With the monsoon session of parliament days away, the BJP
can hardly expect to put the UPA on the mat on the issues of
corruption and governance unless it cleans house in Karnataka,”
said a Times of India editorial on Friday.

Corruption and red-tape have long hindered India, Asia’s
third-largest economy, from maximising its growth potential.

Public anger has risen sharply, with people blaming
politicians of all hues for maintaining a situation where bribes
have to be paid for everything from a school admission to
getting a death-certificate.

Topping the scandals is a charge a telecoms minister rigged
the 2007/08 issuance of lucrative telecoms licences, causing a
loss of $39 billion to the state coffers. The minister, since
fired, is in prison along with several executives pending trial.

Perceptions of government inaction have built up massive
support for the anti-graft campaign of veteran social activist
Anna Hazare, who went on a hunger strike in April to demand the
creation of an independent ombudsman to investigate charges of
corruption against senior officials, including the prime
minister.

NEW DELHI (Reuters) – Indian police widened their probe into charges some opposition lawmakers were bribed in 2008 to vote for the Congress party-led government in a confidence vote, as prosecutors prepared Thursday to oppose the bail plea of one of those accused.

Sohail Hindustani Wednesday became the second person to be arrested after the Supreme Court pulled up police for tardy progress in the case, which could prove a fresh embarrassment for Prime Minister Manmohan Singh’s scandal-hit government.

The 2008 confidence vote, which nearly brought down the coalition government, was sparked by opposition to a civil nuclear agreement between the United States and India, which ended New Delhi’s isolation in the global nuclear market.

“He (Hindustani) will be presented in court at 2 p.m. (0830 GMT),” Delhi police spokesman Rajan Bhagat said, affirming the police would seek to continue holding him in custody. Indian law permits accused to be held for up to 90 days without filing charges.

Police have not yet drawn any link between the two arrested suspects and the Congress party, and Singh’s government is unlikely to fall on the scandal as it has a slim majority in parliament.

Singh was returned to power in a national election in 2009, but his second term has been dogged by a series of graft scandals that have paralyzed his government and prevented him from forcefully pushing forward reforms to further open up the $1.6 trillion economy.

Allegations of graft emerged in the middle of the 2008 confidence vote, which was forced on Singh after four communist parties withdrew support from the government over the civilian nuclear deal with the United States.

As parliament debated the 2008 vote, three opposition members stood up waving bundles of cash they said was given to them to vote for the government. In the pandemonium that followed, Singh won the vote by a narrow margin.

Hindustani is accused of acting as a go-between to facilitate the bribes. Once an associate of the youth wing of the main opposition Bharaiya Janata Party (BJP), he has said that he was only acting as a whistle-blower to expose corruption.

LEAKED CABLE

A U.S. diplomatic cable made public by WikiLeaks quoted a political aide as saying Congress leaders had paid lawmakers from a small party $2.2 million each to back Singh.

Singh has denied that any member of his party or government was involved in the cash-for-votes scandal, but the BJP has raised the issue as another instance of the government turning a blind eye to corruption within its ranks.

The former telecoms minister and a coalition lawmaker are in jail pending trial in a case over graft and illegal favors during a 2007/08 grant of lucrative telecoms licenses. Another prominent Congress lawmaker is in jail in a case of graft in issuing contracts for the 2010 Commonwealth Games.

These instances of corruption in high places have eroded public support for Singh’s government, evidenced by the large crowds that gathered across the country to back a hunger strike of anti-graft activist Anna Hazare in April.

Police had earlier arrested in the case a former aide to Amar Singh, who in 2008 was a top leader of the regional Samajwadi Party which had switched positions to vote in favor of the nuclear deal and the government.

The three opposition members, all from the BJP, told a parliamentary inquiry that Amar Singh had offered them the bribes, after speaking to Ahmed Patel, the powerful political secretary to Congress party chief Sonia Gandhi.

The inquiry had concluded that there was “no case” against Patel and “no clinching evidence” against Amar Singh. Amar Singh is not related to Manmohan Singh.

NEW DELHI (Reuters) – Police widened their probe into charges some opposition lawmakers were bribed in 2008 to vote for the Congress party-led government in a confidence vote, as prosecutors prepared on Thursday to oppose the bail plea of one of those accused.

Sohail Hindustani on Wednesday became the second person to be arrested after the Supreme Court pulled up police for tardy progress in the case, which could prove a fresh embarrassment for Prime Minister Manmohan Singh’s scandal-hit government.

The 2008 confidence vote, which nearly brought down the coalition government, was sparked by opposition to a civil nuclear agreement between the United States and India, which ended New Delhi’s isolation in the global nuclear market.

“He (Hindustani) will be presented in court at 2 p.m. (0830 GMT),” Delhi police spokesman Rajan Bhagat said, affirming the police would seek to continue holding him in custody. Indian law permits accused to be held for up to 90 days without filing charges.

Police have not yet drawn any link between the two arrested suspects and the Congress party, and Singh’s government is unlikely to fall on the scandal as it has a slim majority in parliament.

Singh was returned to power in a national election in 2009, but his second term has been dogged by a series of graft scandals that have paralysed his government and prevented him from forcefully pushing forward reforms to further open up the $1.6 trillion economy.

Allegations of graft emerged in the middle of the 2008 confidence vote, which was forced on Singh after four communist parties withdrew support from the government over the civilian nuclear deal with the United States.

As parliament debated the 2008 vote, three opposition members stood up waving bundles of cash they said was given to them to vote for the government. In the pandemonium that followed, Singh won the vote by a narrow margin.

LEAKED CABLE

A U.S. diplomatic cable made public by WikiLeaks quoted a political aide as saying Congress leaders had paid lawmakers from a small party $2.2 million each to back Singh.

Singh has denied that any member of his party or government was involved in the cash-for-votes scandal, but the main opposition Bharatiya Janata Party (BJP) has raised the issue as another instance of the government turning a blind eye to corruption within its ranks.

Former telecoms minister A. Raja and DMK MP Kanimozhi are in jail pending trial in a case over graft and illegal favours during a 2007/08 grant of lucrative telecoms licences. Prominent Congress lawmaker Suresh Kalmadi is also in jail in a case of graft in issuing contracts for the 2010 Commonwealth Games.

These instances of corruption in high places have eroded public support for Singh’s government, evidenced by the large crowds that gathered across the country to back a hunger strike of anti-graft activist Anna Hazare in April.

Police had earlier arrested in the case a former aide to Amar Singh, who in 2008 was a top leader of the regional Samajwadi Party which had switched positions to vote in favour of the nuclear deal and the government.

The three opposition members, all from the BJP, told a parliamentary inquiry that Amar Singh had offered them the bribes, after speaking to Ahmed Patel, the powerful political secretary to Congress party chief Sonia Gandhi.

The inquiry had concluded that there was “no case” against Patel and “no clinching evidence” against Amar Singh. Amar Singh is not related to Manmohan Singh.

NEW DELHI (Reuters) – Indian investigators began probing on Thursday the triple bomb blasts which killed 18 people in the financial capital Mumbai, in the biggest attack since Pakistan-based militants rampaged through the city in 2008.

No one has claimed responsibility for Wednesday’s blasts, but security analysts say the pattern of the attack points to a local militant group called the Indian Mujahideen (IM).

Home Minister Palaniappan Chidambaram said it is too early to pinpoint the perpetrators, but the attacks could be in retaliation for a number of plots foiled by police or arrests, including of members from the Indian Mujahideen and Indian Maoists.

A remote possibility is the Pakistan-based separatist group Lashkar-e-Taiba (LeT), known for its sympathies for al Qaeda and blamed for the 2008 Mumbai attacks that killed 166 people.

Other groups that could have reasons to carry out the strike include groups fighting for independence of the Kashmir region, Maoist rebels or local mafia.

WHO ARE THE INDIAN MUJAHIDEEN?

The Indian Mujahideen is described by global intelligence firm Stratfor as “a relatively amateurish group that’s been able to carry out low to medium intensity attacks.”

While its members are mostly local Muslims, the group is suspected of having been trained and backed by militant groups in neighboring Pakistan and Bangladesh.

The group first emerged during a wave of bombings in north India in 2007. They have since claimed responsibility for bomb attacks in the cities of Jaipur, Bangalore, Ahmedabad and New Delhi.

The last attack they claimed was in 2010 in the western city of Pune, where a bomb blast at a tourist spot killed nine people.

Police say the Indian Mujahideen may also include former members of Bangladeshi militant group Harkat-ul-Jihad al Islami.

The demands of the Indian Mujahideen, like their targets, have tended to be domestic. The group has declared “open war against India,” accusing the Indian army of killing Muslims in Kashmir and also directing its ire at the Mumbai police anti-terrorist squad, accusing them of harassing Muslims.

WHO ARE LASHKAR-E-TAIBA?

The “army of the pure” is one of the largest Islamic militant groups in South Asia but has not been operating recently.

Once nurtured by Pakistan’s military to fight India in Kashmir, it is now under a tight leash since the 2008 Mumbai attacks, for fear of a new attack that would invite retribution on Pakistan.

The group claimed responsibility for the attack on an army base in New Delhi’s historic Red Fort which killed three people in late 2000 and for an assault on India’s parliament in 2001 that brought India and Pakistan to the brink of a fourth war.

In 2005, it was blamed for bomb attacks on markets in New Delhi that killed more than 60 people.

The United States has designated the LeT as a “foreign terrorist organization.” Pakistan banned it in 2002, but critics say it long operated openly under different names.

LOCAL MAFIA

Mumbai is home to several powerful organized criminal gangs that run extortion, money laundering and smuggling rackets. They are active in real estate and in financing and distributing Bollywood films.

The biggest of these gangs, led by fugitive Dawood Ibrahim, has been accused of carrying out strikes on behalf of Pakistan-based militant and intelligence groups. Ibrahim’s gang is blamed for a 1993 bomb attack in Mumbai that killed at least 230 people.

Ibrahim is believed by India to be in hiding in Pakistan. The United States in 2003 designated him as a “global terrorist” for his links to the al Qaeda and for financing militant groups.

His wealthy crime network is still believed to be active in India and capable of providing assistance for attacks, if not directly carry them out.

MAOIST INSURGENTS

Maoists rebels control vast swathes of India’s countryside, the so called “Red Corridor” that extends from the southern state of Andhra Pradesh through the central state of Chattisgarh and into West Bengal.

Their estimated 20,000 combatants have carried out hundreds of deadly attacks over the last few years, mostly on armed troops, and destroyed railway lines and factories in the hinterland.

The Maoists, who say they are fighting on behalf of poor peasants and indigenous tribes, have so far not attacked urban centers. It is doubtful whether they have the capability or intent to carry out such strikes.

WHY MUMBAI? WHY NOW?

India has long been under the threat of militant attacks by a variety of groups ranging from separatists in the northeast to Hindu nationalists and Islamists.

But there is a possibility the latest strike could be aimed at scuttling fledgling attempts to revive the peace process between New Delhi and Islamabad.

India and Pakistan have recently begun talks that were frozen after the 2008 Mumbai attacks and some of the progress has surprised observers.

But an attack linked to Pakistan will almost certainly put pressure on India to pull out of talks and take a hardline stance.